The Federal Reserve, also known as the Fed, is holding off on cutting interest rates until inflation slows down to 2%. Jerome Powell, the head of the central bank in the United States, provided reassurance during his press conference that there would be no immediate increase in the Fed’s policy rate in future meetings. Powell indicated that the next move in the policy rate is more likely to be a hold rather than an increase.
According to the Fed, cutting interest rates will not happen until they are confident that inflation is trending downwards to the 2% target. Powell noted that building this confidence may take longer than initially expected. The ultimate goal is to maintain a steady rate of inflation at 2%. March saw consumer prices in the US rise by 3.5% year-on-year, as reported by the Department of Labor statistics.
During their recent meeting, the Federal Reserve opted to keep the key interest rate unchanged, falling within the 5.25-5.50% range. This decision was unanimously agreed upon, citing the lack of progress towards achieving the 2% inflation target as the primary reason for maintaining the current interest rate. The Fed acknowledged the uncertain economic outlook and emphasized their commitment to closely monitoring inflation risks.